Category Archives: Banking

The Union Budget for 2013-14, presented by the finance minister of India, P Chidambaram, has been thoroughly analyzed by analysts, media and economists. Many have pointed out the fine prints, and there are loads and loads of analysis on what it would do to Indian economy, different sectors, and different sections of our demographics.

But in all these discussions that I have eagerly followed, I am yet to come across any comments on one of his promises: that every public sector bank branch would have an ATM by March 2014. This is what the FM said in his budget speech (see section 86)

Financial inclusion has made rapid strides. All scheduled commercial banks and all RRBs are on core banking solution (CBS) and on the electronic payment systems (NEFT and RTGS). We are working with RBI and NABARD to bring all other banks, including some cooperative banks, on CBS and e-payment systems by 31.12.2013. Public sector banks have assured me that all their branches will have an ATM in place by 31.3.2014

I know it is neither as serious a matter for economists as current account deficit nor as interesting for everyone as an all women’s bank branch. It does not impact as many people directly as the tax slabs; neither does it have enough controversy in it to deserve comments from politicians.

Yet, this part of the speech got my natural attention, when I was listening to the speech live on TV. Having been a little familiar with the current numbers—thanks to my twin interests, payment systems and data journalism (lots of my tweets are around these numbers)—I was finding the target a little too ambitious.

So, I got into some extraction of numbers and a quick analysis of those numbers. And here is what the FM’s promise translates into.

By the end of March 2012 (that is end of FY 12), India had 67,466 PSU bank branches. That may not be such a huge number when seen in context with Indian population. But the number of ATMs that were attached to some of these branches (called onsite ATMs in Indian banking parlance), were much less. All PSU banks together had only 34,012 onsite ATMs. That number, of course, increased to 36,767 by December 2012.

The public sector banks have, on an average, added a little more than 3500 branches per year in the last five years leading to FY 12. So, even by a conservative estimates, the PSU banks are likely to have not less than 72,000 branches by the end of March 2014—the reference date for the FM for all of those branches having an ATM.

So, going by the current numbers, 35, 233 onsite ATMs need to be added between 31 December 2012 and 31 March 2014 (15 months) for all the PSU branches to have an ATM. That is almost doubling (96% growth, to be precise) the onsite ATM base in PSU banks.

Do you think it is realistic? Especially, when you consider that between March 2007 to March 2012, they have added 23,723 onsite ATMs. And there is no major acceleration considering in the nine months after that—that is between March 2012 to December 2012—they have added only 2755 onsite ATMs.

So, there are only three possibilities. One, I am terribly wrong somewhere. Two, there is something happening inside which we don’t know. And three, the FM has just been carried away without caring too much to be realistic. After all, it is an election budget.

The first possibility is inconsequential. The second possibility calls for a celebration.

The third possibility is a dangerous proposition. I thought whether the Budget is good or bad in a year, at least the basic arithmetics gets done to put the ends together.

There is one more probability. Maybe, the FM was wrong but only technically. Maybe, he meant that for every branch of PSU bank, there would be an ATM. What it means is that the number of PSU branches and no of PSU ATMs would be same, irrespective of where those ATMs are located. If we go by that number, the total ATMs (both onsite and offsite put together), they have 63, 739 ATMs. That means in the next 15 months, going by the same estimated number of branches (72,000), they need to add 8261 ATMs, slightly aggressive going by the last five years’ numbers but not exactly unrealistic.

So, the FM’s speech should have read

Public sector banks have assured me that for each of the branches that they have, they will have one ATM in place by 31.3.2014

And that is no less laudable goal to have. Since the FM talked about the ATMs in the context of financial inclusion, how does it matter if the ATM is “in the branch” or anywhere else?